Foundations of Business, 7th Edition Solution Manual by William M. Pride, All Chapters 1 - 47, Complete Verified Latest Version

Solution Manual de




Foundations of Business 7th Edition
de de de de de




by William M. Pride, All chapter 1 - 47
de de de de de de de de de

,Chapter 1 de




End of Chapter Questions
de de de




Quiz Yourself de




1. Scarcity implies that the allocation decision chosen by society can
de de de de de de de de de



a) not make more of any one good. de de de de de de



b) always make more of any good. de de de de de



c) typically make more of one good but at the expense of making less de de de de de de de de de de de de



of another. de de



d) always make more of all goods simultaneously. de de de de de de



Explanation: Scarcity implies that choices involve trade-
de de de de de de de



offs.

AACSB: Reflective Thinking de de



Accessibility: Keyboard Navigation
de de de



Blooms: Understand
de de



Difficulty: 02 Medium de de



Gradeable: automatic
de de



Learning Objective: 01-01
de de de



Topic: Economics and Opportunity Cost
de de de de




2. A production possibilities frontier is a simple model of
de de de de de de de de



a) allocating scarce inputs to the production of alternative outputs. de de de de de de de de



a) price and production/consumption in a market. de de de de de



b) the cost of producing goods. de de de de



c) the number of inputs required to produce varying levels of output.
de de de de de de de de de de



Explanation: The production possibilities frontier shows the quantity of two goods
d e de de de de de de de de de de



that can be produced. It implies that scarcity requires that choices be made as to how
de de de de de de de de de de de de de de de de



to use resources.
de de de




AACSB: Reflective Thinking de de



Accessibility: Keyboard Navigation
de de de



Blooms: Understand
de de



Difficulty: 02 Medium de de



Gradeable: automatic
de de



Learning Objective: 01-01
de de de



Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
de de de de de de de de

,3. The underlying reason that there are unattainable points on a production possibilities
de de de de de de de de de de de



frontier is that there
de de de de



a. is government. de



b. are always choices that must be made. de de de de de de



c. are scarce resources within a fixed level of technology.
de de de de de de de de



d. is unemployment of resources. de de de



Explanation: The points outside the production possibilities frontier are unattainable. This
de de de de de de de de de de



means that currently available resources and technology are insufficient to produce
de de de de de de de de de de de



amounts greater than those illustrated on the frontier. On a graph, everything beyond
de de de de de de de de de de de de de



the frontier is unattainable.
de de de de




AACSB: Reflective Thinking de de



Accessibility: Keyboard Navigation
de de de



Blooms: Remember
de de



Difficulty: 01 Easy de de



Gradeable: automatic
de de



Learning Objective: 01-01
de de de



Topic: Modeling Opportunity Cost Using the Production Possibilities Frontier
de de de de de de de de




4. The underlying reason production possibilities frontiers are likely to be bowed out
de de de de de de de de de de de



(rather than linear) is because
de de de de de



a. choices have consequences. de de



b. there are always opportunity costs. de de de de



c. some resources and people can be better used producing one good
de de de de de de de de de de



rather than another. de de de



d. there is always some level of unemployment. de de de de de de



Explanation: If the production possibilities frontier is not a line but is bowed out away
de de de de de de de de de de de de de de



from the origin, then opportunity cost is increasing. The reason for this is that as we
de de de de de de de de de de de de de de de de



add more resources to the production of, for example, pizza, we are using fewer
de de de de de de de de de de de de de de



resources to produce soda. Compounding that problem, at each stage as we take the
de de de de de de de de de de de de de de



resources away from soda and put them into pizza, we are moving workers who are
de de de de de de de de de de de de de de de



worse at pizza production and better at soda production than those moved in the
de de de de de de de de de de de de de de



previous stage. This means that the increase in pizza production is diminishing and the
de de de de de de de de de de de de de de



loss in soda production is increasing. An economist would call this an example of
de de de de de de de de de de de de de de



increasing opportunity cost. If the production possibilities frontier is a straight line that
de de de de de de de de de de de de de



is not bowed out away from the origin, then opportunity cost is constant.
de de de de de de de de de de de de de




AACSB: Knowledge Application de de



Accessibility: Keyboard Navigation
de de de



Blooms: Remember
de de



Difficulty: 01 Easy de de



Gradeable: automatic
de de



Learning Objective: 01-02
de de de



Topic: Attributes of the Production Possibilities Frontier
de de de de de de

, 5. Suppose you were modeling the impact of the introduction of computer automation
de de de de de de de de de de de



into manufacturing on a production possibilities frontier (PPF) with two
de de de de de de de de de de



manufactured goods on their respective axes. It would be more likely that the result
de de de de de de de de de de de de de de



would be
de de de .
a) generalized growth with the PPF moving both up and to the right. de de de de de de de de de de de



b) specialized growth with the PPF moving both up and to the right. de de de de de de de de de de de



c) generalized growth with the PPF just moving up and not to the right. de de de de de de de de de de de de



d) specialized growth with the PPF just moving up and not to the right. de de de de de de de de de de de de



Explanation: Computer automation is a general improvement in technology so it
de de de de de de de de de de de



would improve all manufacturing. As a result, it would result in generalized growth
de de de de de de de de de de de de de



and move the PPF both up and to the right.
de de de de de de de de de de




AACSB: Knowledge Application
de de



Accessibility: Keyboard Navigation
de de de



Blooms: Remember
de de



Difficulty: 01 Easy de de



Gradeable: automatic
de de



Learning Objective: 01-03
de de de



Topic: Economic Growth
de de de




6. The optimization assumption suggests that people make
de de de de de de



a. irrational decisions. de



b. unpredictable decisions. de



c. decisions to make themselves as well off as possible. de de de de de de de de



d. decisions without thinking very hard. de de de de



Explanation: The optimization assumption suggests that the person in question is trying
de de de de de de de de de de de



to maximize some objective. Consumers are assumed to be making decisions that
de de de de de de de de de de de de



maximize their happiness subject to a scarce amount of money.
de de de de de de de de de de




AACSB: Reflective Thinking de de



Accessibility: Keyboard Navigation
de de de



Blooms: Remember
de de



Difficulty: 01 Easy de de



Gradeable: automatic
de de



Learning Objective: 01-01
de de de



Topic: Thinking Economically
de de